Template:Dust capsule: Difference between revisions
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 3: | Line 3: | ||
{{{{{1}}}|DUST}} is ''like'' {{{{{1}}}|Cross Default}}, but where {{{{{1}}}|Cross Default}} references indebtedness owed to third parties, {{{{{1}}}|DUST}} is all about ''non''-“borrowing” style transactions — e.g., [[swap|swap agreements]], [[stock loan]]s<ref>I know these ''sound'' like borrowing transactions, but they’re fully collateralised, and in fact aren’t.</ref> and [[repo]]s, '''but only transactions between the two counterparties'''<ref>And — sigh — their Credit Support Providers and Specified Entities.</ref>. | {{{{{1}}}|DUST}} is ''like'' {{{{{1}}}|Cross Default}}, but where {{{{{1}}}|Cross Default}} references indebtedness owed to third parties, {{{{{1}}}|DUST}} is all about ''non''-“borrowing” style transactions — e.g., [[swap|swap agreements]], [[stock loan]]s<ref>I know these ''sound'' like borrowing transactions, but they’re fully collateralised, and in fact aren’t.</ref> and [[repo]]s, '''but only transactions between the two counterparties'''<ref>And — sigh — their Credit Support Providers and Specified Entities.</ref>. | ||
If a [[Counterparty]]<ref>Or — sigh — its | If a [[Counterparty]]<ref>Or — sigh — its Credit Support Provider or Specified Entity</ref> experiences an {{{{{1}}}|Event of Default}} under a [[swap]] agreement (or other “{{{{{1}}}|Specified Transaction}}”<ref>This is typically wide, though it excludes [[borrowed money]] — but check the Agreement!</ref> with you, this will be an {{{{{1}}}|Event of Default}} under the {{isdama}}. | ||
Revision as of 09:09, 24 September 2020
{{{{{1}}}|Default Under Specified Transaction}} — colloquially, “{{{{{1}}}|DUST}}” — is often confused with {{{{{1}}}|Cross Default}}. In fact, they’re meant to be mutually exclusive. That won’t stop folks conflating them, though. Look, we all do it.
{{{{{1}}}|DUST}} is like {{{{{1}}}|Cross Default}}, but where {{{{{1}}}|Cross Default}} references indebtedness owed to third parties, {{{{{1}}}|DUST}} is all about non-“borrowing” style transactions — e.g., swap agreements, stock loans[1] and repos, but only transactions between the two counterparties[2].
If a Counterparty[3] experiences an {{{{{1}}}|Event of Default}} under a swap agreement (or other “{{{{{1}}}|Specified Transaction}}”[4] with you, this will be an {{{{{1}}}|Event of Default}} under the ISDA Master Agreement.
- ↑ I know these sound like borrowing transactions, but they’re fully collateralised, and in fact aren’t.
- ↑ And — sigh — their Credit Support Providers and Specified Entities.
- ↑ Or — sigh — its Credit Support Provider or Specified Entity
- ↑ This is typically wide, though it excludes borrowed money — but check the Agreement!